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The calls to increase minimum wage in 2024 continues, with many legislators and U.S. citizens proposing to increase the federal minimum wage to $15 per hour from the $7.25 rate enacted in 2009. While the federal government has yet to pass a revision, many states and municipalities have independently changed their hourly rates. The minimum wage across the United States ranges from $17 to as low as $5.15, depending on the state.
Key Takeaways
- The minimum wage is the lowest amount an employer can legally pay an hourly worker under the Fair Labor Standards Act.
- The federal minimum wage has been $7.25 since 2009.
- As of November 2024, the District of Columbia had the highest minimum wage rate of $17.00 per hour for municipalities.
History of the Minimum Wage
A minimum wage is the lowest hourly rate an employer pays covered, nonexempt employees, established as part of the Fair Labor Standards Act (FLSA). Individual states may also pass their minimum-wage laws, setting limits that are higher or lower than what is required by the federal government.
As of November 2024, the U.S. Department of Labor (DOL) reports that 30 states pay more than the federal wage floor of $7.25, as well as the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. While the federal government has yet to pass legislation to match a debated $15 rate, many municipalities, such as New York City, have enacted a local minimum wage to account for higher costs of living. Some state legislatures have policies to raise their minimum wages by set amounts at predetermined dates. Florida residents voted in November 2020 to increase the state’s minimum wage incrementally until it reaches $15 per hour in September 2026.
Of the remaining 20 states, 13 have minimum wages equal to the current federal rate. Some state legislatures do not specify an actual dollar amount but have a provision to ensure that their rate always matches the federal minimum wage.
Two states—Wyoming and Georgia—have a minimum wage that is lower than the federal minimum wage, while Alabama, Louisiana, Mississippi, South Carolina, and Tennessee do not have an established minimum wage. In these cases, employers must still pay the federal minimum wage.
As of November 2024, the District of Columbia had the highest minimum wage rate of $17.00 for state-level governments, and West Hollywood, Calif., has the highest minimum wage rate for local regions, at $19.08, which will increase to $19.65 in January.
Highest and Lowest Wages by State
The highest minimum wage requirements statewide as of November 2024 are within California at $16.00 and the District of Columbia at $17.00. Conversely, at $5.15 per hour, Georgia and Wyoming are the only states with a minimum wage below the federal mark of $7.25.
Despite lower state-approved minimums, federal law dictates that the higher of either the state or federal minimum is legally applicable, which means that the enforceable minimum wage in Georgia and Wyoming is $7.25. Employers cannot pay their nonexempt hourly workers less than the federal mark, so the price floor is still $7.25 per hour.
For states that set a minimum wage above the federal mark, many include contingencies. Arkansas’ minimum wage of $11 applies to employers of four or more employees. Those with three or fewer employers pay at least $7.25 per hour. Minnesota’s highest minimum wage is $10.85 per hour for employees of a “large employer” or an “enterprise with annual revenues of $500,000 or more.” In the case of a “small employer” or an “enterprise with annual revenues of less than $500,000,” the minimum wage is $8.85 per hour.
Minimum Wage Policy
Arguments for and against a minimum wage hike are commonly supported by data limited to individual case studies. Many argue that a federal minimum wage hike would lead to layoffs and a rise in unemployment, increased poverty rates, closures of small businesses, and the price of consumer goods.
Those in favor of an increase cite studies by the Economic Policy Institute that found the real value of the $7.25 minimum wage failed to keep up with inflation and declined more than 17% in its first ten years from 2009 to 2019. The Institute also cites that low wages hurt “black workers and other workers of color,” who already make up a disproportionate share of the severely underpaid.
What Determines a State’s Minimum Wage?
Each state’s determination of the minimum wage may reflect the politics of the issue but includes other factors, such as the cost of living. State minimum wages are determined by many factors, as long as the wage equals or is above the federal level.
Is the Federal Minimum Wage In Line With Costs of Living Standards?
The federal minimum wage does not automatically increase to match inflation, and the cost of living is not directly proportional to the minimum wage according to any official standard.
What Was the First Federal Minimum Wage Rate?
Under the Fair Labor Standards Act of 1938, the first hourly minimum wage rate was $0.25.
The Bottom Line
The minimum wage disparities among states show how individuals and legislators view the issue, and many call for increases to match the current cost of living. Some states have raised the minimum wage incrementally or established “tiers” for different business sizes. Many match the existing federal mandate of $7.25 per hour.